Dell Technologies Inc. (DELL) delivered a tale of two quarters on Tuesday evening. The numbers looked a bit messy on the surface—revenue came in at $27.01 billion, just shy of the $27.13 billion analysts were expecting. But dig into what's actually happening with the business, and the story gets a lot more interesting.
The company beat earnings expectations with adjusted EPS of $2.59 versus the $2.47 consensus. Total revenue climbed 11% year-over-year, and the breakdown tells you everything about where the momentum is coming from.
The AI Engine Is Roaring
Servers and Networking revenue hit $10.1 billion, up a hefty 37% year-over-year. Storage brought in $4 billion, down 1%. Commercial Client revenue reached $10.6 billion, up 5%, while Consumer revenue dropped 7% to $1.9 billion.
But here's the real headline: AI server orders reached a record $12.3 billion in the quarter alone. That brings the year-to-date total to an eye-popping $30 billion.
"AI momentum is accelerating in the second half of the year, leading to record AI server orders of $12.3 billion and an unprecedented $30 billion in orders year to date," said Jeff Clarke, Dell's vice chairman and COO.
"Dell is winning in AI because of our unique ability to engineer bespoke high-performance solutions, rapidly deploy large, complex clusters, and provide global support."
The Outlook Is Where Things Get Interesting
Dell expects fourth-quarter revenue between $31 billion and $32 billion, which at the midpoint represents 32% year-over-year growth. Fourth-quarter adjusted earnings are projected at $3.50 per share versus analyst estimates of just $3.23.
The company also raised its full-year guidance significantly. Dell now expects fiscal 2026 revenue of $111.2 billion to $112.2 billion, up from a prior range of $105 billion to $109 billion. Full-year adjusted earnings guidance jumped from $9.55 per share to $9.92 per share, compared to analyst estimates of $9.55.
Dell generated $1.2 billion in cash flow from operations during the quarter and returned $1.6 billion to shareholders through buybacks and dividends. The company ended the period with approximately $9.57 billion in cash and equivalents.
Despite the strong outlook, Dell shares were down 1.18% in after-hours trading Tuesday, changing hands at $124.43.
